President Putin Directs Government Attack on Bill Browder to Stop Magnitsky Sanctions Being Enacted in Europe

March 5, 2013

In a further escalation of the persecution of Hermitage executives and lawyers by the Russian authorities, this morning the Russian Interior Ministry announced new spurious allegations targeting William Browder, CEO of Hermitage Capital Management. The retaliatory campaign of state slander, posthumous prosecution and intimidation gained momentum in Russia after President Putin’s personal attack on Mr Browder two months ago at a national press conference. This morning, the Russian Interior Ministry made further accusation against Mr. Browder alleging “theft” of Gazprom shares by companies affiliated with the Hermitage Fund ten years ago and accusing Bill Browder of attempting to interfere with Gazprom’s strategic direction through requests for financial information and for campaigning for a seat on the board of the company between 2001 and 2004. The Russian Interior Ministry also threatened to use international search and arrest warrants in their “investigation” into Browder.

“The Interior Ministry’s allegations against Hermitage are spurious and without any foundation. The only logic that support the allegation of “theft” of Gazprom shares would be to think that the assets of the company belong to the company’s management who also happens to run the country, not to its investors and shareholders,” said a Hermitage Capital representative.

“These absurd allegations are clearly motivated by the retaliation to our global campaign for justice for Sergei Magnitsky. Our campaign angers and scares the Russian officials who want to keep their criminally obtained wealth abroad. But this intimidation and harassment will not stop the campaign that is carried out by many people and organizations around the world,” said William Browder.

Mr Browder has been running a global campaign for justice seeking sanctions against Russian officials involved in the killing in Russian police custody of his lawyer Sergei Magnitsky. The campaign has also traced significant amounts of the money that had been paid by Hermitage in taxes to the Russian Government and subsequently stolen by the Russian officials and criminals through a sophisticated fraud scheme, which is now being investigated across a number of EU countries at Hermitage’s request.

“The Russian authorities are now desperate to extend their abuse outside their own territory and use the international criminal justice channels to further harass Hermitage and stop justice from being done, – said a Hermitage Capital representative. – These efforts have already been condemned in 2009 by the Council of Europe of which Russia is a member which issued recommendations to all member countries to reject any requests of assistance from the Russian government in relation to Hermitage executives and lawyers.”

The recent escalation in the Russian government’s attack on Hermitage follows directly from President Vladimir Putin’s 20 December 2012 press conference, where he was confronted seven times by journalists about the Magnitsky Act adopted in the United States. President Putin promised to “delve deeper” into this case.

Four days later, in an unprecedented U-turn, the Russian public prosecutor asked for an acquittal of Dmitry Kratov, the only Russian official brought to a trial for the death of Sergei Magnitsky. As a result, no one has been convicted for Mr Magnitsky’s death.

The following month, Russian state-controlled media began a campaign to slander Sergei Magnitsky and his colleagues.

In February, Sergei Magnitsky’s brother-in-law and colleagues received summonses for interrogation from the Russian Interior Ministry and were intimidated with threats of criminal prosecution.

Yesterday, the posthumous trial against Sergei Magnitsky began, which is the first posthumous trial in the history of Russia.

This morning, the Interior Ministry put forward more spurious allegations against Bill Browder and Sergei Magnitsky in relation to Gazprom shares.

“The ownership of Gazprom shares was completely legal. It was approved by the Russian authorities and the Russian Federal Securities Commission as well as Gazprom itself. If one took these accusations seriously then every foreign investor in Russia should be under arrest,” said a Hermitage Capital representative.

Hermitage was the largest foreign investor in Russia until 2005, but had to wind down its operations in Russia when the Russian government revoked the visa of its Bill Browder, Hermitage’s CEO, on “national security” grounds. Hermitage’s Moscow offices were then raided by the Russian Interior Ministry who seized documents, which were used in the expropriation of three of its investment companies and the theft of $230 million of taxes paid by Hermitage to the Russian government. The Interior Ministry then launched retaliatory criminal cases against Hermitage executives and lawyers who exposed the multi-million thefts from the Russian budget. After Sergei Magnitsky testified about official involvement in the crimes, he was arrested, tortured and killed in Moscow police custody. The Russian government has now tried to posthumously blame the theft on Mr Magnitsky, who paid with his life for exposing their crimes.